Essay on the Role of Overseas Aid in Developing Countries
The useful role of overseas aid in development.
Introduction
For the last three decades overseas aid has emerged as a dominant strategy for alleviating poverty in the third world. During this period major international institutions such as the UN, World Bank and IMF gained reputation in the global economic affairs. Yet it seems that the lesser developed countries (LDCs) continue to suffer from economic hardship raising the questions whether overseas aid is worthwhile and effective approach to boosting growth and development in recipient economies.
Research on the subject has attempted to draw experimental connection between overseas aid and economic growth in particular and development in general. Despite these research efforts, however there is no concrete agreement among scholars on actual effectiveness of overseas aid (Raghuram G, Rajan & Arvind Subram, 2005).
The term “Overseas Aid” can imply all money that would be classified as official development assistance, and it incorporates military assistance, political development programs, export promotion, debt forgiveness, and non-concessional lending by all bilateral and multilateral organizations. Any money that benefits a developing country in form of grants, concessional loans, or non-concessional loans from a governmental or quasi-governmental organization is considered overseas aid according to Congressional Budget Office.
Critics of development assistance cite a variety of reasons why it is a poor strategy for combating global poverty. Some argue that it can breed corruption weaken accountability, and cause government to become excessively large (Knack, 2001). Nonetheless as researchers (Hansen and Tap, 2000) write, “It is neither analytically defensible nor empirically credible to argue from the outset that aid never works”.
Indeed, a number of studies have shown a positive relationship between overseas aid and development especially in countries which have sound economic policies that promote
Introduction
For the last three decades overseas aid has emerged as a dominant strategy for alleviating poverty in the third world. During this period major international institutions such as the UN, World Bank and IMF gained reputation in the global economic affairs. Yet it seems that the lesser developed countries (LDCs) continue to suffer from economic hardship raising the questions whether overseas aid is worthwhile and effective approach to boosting growth and development in recipient economies.
Research on the subject has attempted to draw experimental connection between overseas aid and economic growth in particular and development in general. Despite these research efforts, however there is no concrete agreement among scholars on actual effectiveness of overseas aid (Raghuram G, Rajan & Arvind Subram, 2005).
The term “Overseas Aid” can imply all money that would be classified as official development assistance, and it incorporates military assistance, political development programs, export promotion, debt forgiveness, and non-concessional lending by all bilateral and multilateral organizations. Any money that benefits a developing country in form of grants, concessional loans, or non-concessional loans from a governmental or quasi-governmental organization is considered overseas aid according to Congressional Budget Office.
Critics of development assistance cite a variety of reasons why it is a poor strategy for combating global poverty. Some argue that it can breed corruption weaken accountability, and cause government to become excessively large (Knack, 2001). Nonetheless as researchers (Hansen and Tap, 2000) write, “It is neither analytically defensible nor empirically credible to argue from the outset that aid never works”.
Indeed, a number of studies have shown a positive relationship between overseas aid and development especially in countries which have sound economic policies that promote